Home prices in Portland soar in May, defying sharp rise in mortgage rates
Home prices in Portland jumped 11.7% to a median of $575,000 in May from $515,000 a year ago, according to RMLS, as tight supply offset higher interest rates. interest, which tend to cool real estate markets by increasing monthly payments.
“Total time to market”, the length of time between when a property is put up for sale and when an offer is accepted, fell to 18 days in May, from 21 days in April and 22 days in May 2021.
“We’re in a very strong seller’s market,” said Aryne Blumklotz, senior real estate broker at Living Room Realty. “There’s not much to buy.”
Blumklotz recently represented an Alberta neighborhood seller who received nine offers for a home listed at $675,000. She held three open days, all packed. The house is not closed yet, so it cannot reveal the winning bid. A few weeks prior, she had sold a home in Alameda for $995,000 that was listed at $869,000.
Even so, there are signs that the market could ease. Blumklotz says she gets more emails from other agents about landlords dropping prices. It’s probably because of rising mortgage rates, she said.
“Most buyers buy for a monthly payment,” says Blumklotz. When rates were low, these people could stretch to borrow more money while meeting their payment goal. “Now these people can’t stretch,” Blumklotz says.
The US Federal Reserve is raising interest rates at the fastest rate in decades in an attempt to rein in runaway inflation. Higher interest rates make borrowing more expensive, which slows demand for goods, especially big-ticket items like houses.
Related: We asked a financial adviser: Should you break the bank on big purchases, or wait?
When the Fed raises rates, economists talk about how the central bank takes the punch away. The term came into use in 1955 after Fed Chairman William McChesney Martin gave a speech at the Waldorf Astoria Hotel and likened the central bank to “a chaperone who ordered the removal of the punch bowl just when the party was really heating up.”
The average rate for a 30-year fixed mortgage is about 5.23% today, according to the St. Louis branch of the Federal Reserve, up from 3.11% in January.
Maybe have another glass of punch before the bowl disappears.